Over the past few decades, the economy growth in South Africa has declined. The people who are focused on growing their businesses, are high potential entrepreneurs and they are also responsible for creating growth and employment in the economy. The economic growth rate needs to increase with 12% per year to get to the employment rate of 3% which will help to overcome the unemployment rate of 25.2%. But statistics reveal that if the labour market is more flexible the lower the unemployment rate will be.
Another reason for South Africa having a high unemployment rate is because they don’t have enough business people involved in small businesses to create work for people. Entrepreneurship is a scarce resource in South Africa. However they have many successful entrepreneurs. Skills are required for entrepreneurship such as strategy-, planning-, marketing-, financial-, project management- and human relations skills (Erasmus et al, p.44,45). The three important themes concerning South Africa is Finance, Training and Skills and the Regulation environment for SMME’s (Small, Medium and Micro-Enterprises).
Several research have been done and will be analysed in the overview.
Challenges which entrepreneurs face in South Africa is access to finance when starting a business and keeping it going through the years, especially with all the prices increasing regularly. Nowadays it’s a hassle to get a loan at the bank, most people don’t qualify for one because they have bad debts and their credit history aren’t looking too good. And that is what the bank don’t approve of.
Over the past decade the relationship between finance and the SMME’s development has generated an enormous volume of writings in South Africa. (Rogerson, 2008). The most important source of start-up capital is to seek offering tax incentives and that will be stimulating by the supply of capital from family and friends. When the bank doesn’t want to give a loan people usually go and look at their personal savings or they borrow from friends or relatives just to start-up their business. When a business has its finance to open its doors and start the business, it just needs to pull through by growing the business and then getting to a stable phase where the business is financially safe.
Challenges which entrepreneurs face in South Africa is also training and skills. These aspects are one of the key factors to actually becoming an entrepreneur. Education, training and experience in a field can privilege an entrepreneur to being successful and can contribute him/her to identifying opportunities, starting a business and managing it. Several training facilities and conferences are held to improve the success of entrepreneurs in South Africa. They’re also held to motivate them to keep going, endurance can be a difficult task to overcome when the world is in recession and they struggle to get something out of the community/consumers. When unemployment is a problem to most people it triggers some to becoming entrepreneurs and working on their skills just to better themselves and becoming successful in what they are doing. We will recognise them as necessity entrepreneurs. Challenges which entrepreneurs also face in South Africa is the regulation and the regulatory environment.
Overall, it is more likely that regulation is considered to be a catalyst or facilitator of development (Rogerson, C. 2008). The regulatory environment empowers individuals to start their own businesses. The entrepreneur needs to keep in mind the demand and supply of products to keep the business flowing. Environmental scanning can also be done to help him/her out with figures and knowing if there is any interest in the products the entrepreneur is selling. But for the entrepreneurs to start their own businesses they need capital and skills to actually get everything going and managing it to be and stay successful for a long time if not, always. Most SMME’s don’t understand the laws which can cause problems in the long term for the businesses’ financial records – they can loose capital, instead of gaining it. Several SMME’s don’t go through all the documentation and regularities of starting and maintaining their business, because its time consuming and can be expensive. If they find it difficult, it makes it easier to push aside and ‘forget about it’.
Accessing finance, looking for training opportunities and maintaining a regulatory environment isn’t an easy and quick task. But it is the most important three aspects to investigate on when starting a business. We can also recognise it by ‘The SMME Development’ that has different phases to complete. For a business to be/stay successful and to continue over the years, they need to review the finance, training/skills opportunities and regulatory environment.